The Yorkshire and Clydesdale Bank (YCB) Pension Scheme has announced a longevity swap transaction with Pacific Life Re International and Zurich Assurance to manage longevity risk in relation to approximately £1.6bn of pensioner liabilities.

The arrangement provides long-term protection to the scheme against costs resulting from pensioners or their dependants living longer than currently expected, enhancing security for scheme members, according to a news release.

The longevity insurance policy is structured as an insurance arrangement between the trustee and Zurich, and a back-to-back reinsurance arrangement between Zurich and Pacific Life Re using Zurich’s pass-through solution.

Under this pass-through structure Pacific Life Re assumes 100% of the longevity risk associated with around 9,000 members of the scheme and the trustee and Pacific Life Re take on mutual credit risk exposure to each other.

Inder Dhingra, chair of the scheme, said: “The trustee is delighted to have completed this longevity swap which will provide significant protection for our members against the costs associated with future increases in life expectancy.  I would like to thank the Bank, PL Re, ZAL and our advisers for working collaboratively to help us reduce one of the Scheme’s largest risks and improve the security of our members’ benefits as a result.”

Sadie Scaife, consulting actuary at WTW, the lead adviser to the trustee, said: “We worked closely with the trustee and the bank throughout the whole process, from considering the options available for accessing the longevity reinsurance market through to negotiating terms with Pacific Life Re and Zurich Assurance. The transaction was negotiated and implemented over a period of significant volatility in the market and goes to show that longevity swaps continue to be an effective risk management option for pension schemes.”

In addition to WTW and Sackers, the trustee received legal advice from Walkers. Pacific Life Re was advised by CMS and Zurich was advised by Slaughter & May.

Repsol Sinopec completes £160m full scheme buy-in with Rothesay

The Repsol Sinopec Pension and Life Scheme has completed a £160m full scheme buy-in with Rothesay.

The scheme – which is sponsored by Repsol Sinopec Resources UK Limited, an oil and gas exploration and production company operating in the North Sea – will see the transaction secure the benefits for all its members including defined benefit liabilities for 141 pensioners and dependants and a further 306 deferred members.

The buy-in was completed under an accelerated process that allowed the scheme’s trustee to transact quickly to secure the pension fund’s benefits amid market conditions that offered favourable pricing.

The lead broker of the buy-in was Hymans Robertson and the sole trustee was Vidett. Rothesay and the trustee received legal advice from Eversheds and Addleshaw Goddard, respectively. Isio provided investment advice to the trustee.

James Chalk, trustee director at Vidett, said: “The scheme has been through quite a journey over the last 12 months. With the help of our advisors, we acted quickly to lock-in funding level improvements seen in the first half of 2022 and position the scheme to secure a great outcome in an increasingly busy insurance market.

Róisín O’Shea, business development at Rothesay, said: “The continued buoyancy in the bulk annuity market has resulted in more schemes than ever pursuing insurance solutions. Rothesay’s capital strength and dedicated pricing team mean we are able to respond to these opportunities dynamically and at speed, helping schemes to secure the long-term future for their members.”

Read the digital edition of IPE’s latest magazine